Q3 2026 America's Car-Mart Inc Earnings Call

March 12, 2026

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone; you will then hear an automated message advising your hand is raised.

Speaker #1: To withdraw your question, please join me on the call today. The transcripts of our prepared remarks, following this call and the Q&A session, will be available through the webcast during today's call.

Speaker #1: ahead. Good morning. I'm Jonathan Collins, the company's Chief Financial Officer. Welcome to America's Car-Mart's third-quarter fiscal year 2026 earnings call for the period ended January 31, 2026.

Jonathan Collins: Good morning. I'm Jonathan Collins, the company's Chief Financial Officer. Welcome to America's Car-Mart's Q3 fiscal year 2026 earnings call for the period ended 31 January 2026. Joining me on the call today is Doug Campbell, our President and CEO, and Jamie Fischer, our COO. We issued our earnings release earlier this morning, and a supplemental presentation is available on our website. We will post the transcripts of our prepared remarks following this call, and the Q&A session will be available through the webcast. During today's call, certain statements we make may be considered forward-looking and inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view. These statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

Speaker #1: Certain statements we make may be considered forward looking and inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view .

Speaker #1: These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 . The company cannot guarantee the accuracy of any forecast or estimate , nor does it undertake any obligation to update such forward looking statements .

Jonathan Collins: The company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. For more information, including important cautionary notes, please see Part One of the company's annual report on Form 10-K for the fiscal year ended April 30, 2025, and our current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q. As a note, the comparisons we will make will be for Q3 of fiscal 2026 versus Q3 of fiscal 2025, unless otherwise stated. Doug, I'll turn it over to you now.

Speaker #1: For more information , including important cautionary notes , please see part one of the company's annual Report on Form 10-K for the fiscal year ended April 30th , 2025 , and our current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Form 8-K and 10-q As a note , the comparisons we will make will be for the third quarter of fiscal 2026 versus the third quarter of fiscal 2025 , unless otherwise stated .

Speaker #1: Doug , I'll turn it over to you now

Doug Campbell: Thank you, Jonathan, and good morning, everyone, and thank you for joining us today. I want to start by being direct about what happened in Q3. Our retail volume declined 22.1% year-over-year. That's a significant number, and I want to address it head-on. This was not a demand story, it was a capital structure story. Let me explain what that means. Throughout Q3, our ability to purchase inventory at full capacity was constrained by the ongoing transition of our financing platform. Specifically, as I mentioned last quarter, we need a revolving warehouse facility to bridge originations to securitizations. Without that facility, our purchasing had to be managed against available cash rather than a rotating credit line, and that limited how much inventory that we could put on our lots. Top-of-funnel demand tells the real story here.

Douglas Campbell: Thank you, Jonathan, and good morning, everyone, and thank you for joining us today. I want to start by being direct about what happened in Q3. Our retail volume declined 22.1% year-over-year. That's a significant number, and I want to address it head-on. This was not a demand story, it was a capital structure story. Let me explain what that means. Throughout Q3, our ability to purchase inventory at full capacity was constrained by the ongoing transition of our financing platform. Specifically, as I mentioned last quarter, we need a revolving warehouse facility to bridge originations to securitizations. Without that facility, our purchasing had to be managed against available cash rather than a rotating credit line, and that limited how much inventory that we could put on our lots. Top-of-funnel demand tells the real story here.

Speaker #2: Thank you , Jonathan , and good morning , everyone , and thank you for joining us today I want to start by being direct about what happened in the third quarter .

Speaker #2: Our retail volume declined 22.1% year over year That's a significant number . And I want to address it head on . This was not a demand story .

Speaker #2: It was a capital structure story . Let me explain what that means Throughout the third quarter , our ability to purchase inventory at full capacity was constrained by the ongoing transition of our financing platform .

Speaker #2: Specifically , as I mentioned last quarter , we need a revolving warehouse facility to bridge originations to securitizations Without that facility , our purchasing had to be managed against available cash rather than a rotating credit line .

Speaker #2: And that limited how much inventory that we could put on our lots . Top of funnel demand tells the real story here . Website traffic was up 4% year over year Credit applications remained elevated .

Doug Campbell: Website traffic was up 4% year-over-year. Credit applications remain elevated. Our customers are there. Our team is there. The constraint is capital deployment, and we're actively working to resolve that. I also want to note an incremental headwind unique to Q3. Winter Storm Fern struck in the final week of January and directly impacted our entire South Central operating footprint. The timing, the final days of Q3, compressed what was already a volume-challenged period. Jamie will speak to how Pay Your Way platform performed through the storm and the performance that gave us real confidence in the resilience of the collections infrastructure we're building. The subprime auto capital markets have been operating in a more measured environment since last fall.

Douglas Campbell: Website traffic was up 4% year-over-year. Credit applications remain elevated. Our customers are there. Our team is there. The constraint is capital deployment, and we're actively working to resolve that. I also want to note an incremental headwind unique to Q3. Winter Storm Fern struck in the final week of January and directly impacted our entire South Central operating footprint. The timing, the final days of Q3, compressed what was already a volume-challenged period. Jamie will speak to how Pay Your Way platform performed through the storm and the performance that gave us real confidence in the resilience of the collections infrastructure we're building. The subprime auto capital markets have been operating in a more measured environment since last fall.

Speaker #2: Our customers are there . Our team is there . The constraint is capital deployment and we're actively working to resolve that . I also want to note an incremental headwind unique to the third quarter winter storm .

Speaker #2: Fern struck in the final week of January , and directly impacted our entire South Central operating footprint . The timing the final days of the quarter compressed what was already a volume challenged period .

Speaker #2: Jamie will speak to how Pay Your Way platform performed through the storm, and the performance that gave us real confidence in the resilience of the infrastructure we're building.

Speaker #2: The subprime auto capital markets have been operating in a more measured environment since last fall. The industry absorbed significant disruption following the failures of several subprime lenders, events that raised serious and legitimate questions.

Doug Campbell: The industry absorbed significant disruption following the failures of several subprime lenders, events that raised serious questions and legitimate questions among warehouse providers, rating agencies, ABS investors about collateral integrity, loan tape accuracy, and the controls governing these businesses. In the midst of that negative industry noise, we completed our 2025-4 ABS transaction, a $161.3 million asset-backed note rated and successfully placed in a turbulent market. This was our first ABS transaction incorporating a residual cash flow structure, a non-turbo deal. For those less familiar with the ABS mechanics and jargon, a turbo structure accelerates principal payment from investors as a form of credit protection. We call that over-collateralization.

Douglas Campbell: The industry absorbed significant disruption following the failures of several subprime lenders, events that raised serious questions and legitimate questions among warehouse providers, rating agencies, ABS investors about collateral integrity, loan tape accuracy, and the controls governing these businesses. In the midst of that negative industry noise, we completed our 2025-4 ABS transaction, a $161.3 million asset-backed note rated and successfully placed in a turbulent market. This was our first ABS transaction incorporating a residual cash flow structure, a non-turbo deal. For those less familiar with the ABS mechanics and jargon, a turbo structure accelerates principal payment from investors as a form of credit protection. We call that over-collateralization.

Speaker #2: Among warehouse providers Rating agencies , ABS investors about collateral integrity , loan tape accuracy , and the controls governing these businesses . In the midst of that negative industry noise , we completed our 25 for ABS transaction at 161.3 million asset backed note rated and successfully placed in a turbulent market This was our first ABS traction transaction , incorporating a residual cash flow structure , a non-turbo deal for those less familiar with the ABS mechanics and jargon , a turbo structure accelerates principal payment from investors as a form of credit protection .

Speaker #2: We call that overcollateralization . The turbo structure is structurally simpler to rate and easier to sell because the collections on the assets remaining after paying service provider fees and interest on the notes and topping up liquidity reserve accounts are used to pay repay principal to investors .

Doug Campbell: A turbo structure is structurally simpler to rate and easier to sell because the collections on the assets remaining after paying service provider fees and interest on the notes and topping up liquidity reserve accounts are used to repay principal to investors. As a result, the investors get their money back faster as the level of overall collateralization increases during the life of the deal. A residual cash flow structure does quite the opposite. Rather than using all the collections remaining to repay principal on notes, the issuer repays principal on the notes only in an amount necessary to achieve a targeted level of over-collateralization. Once that level is met, the funds remaining each month after paying the provider fees, interest, and principal on the notes and topping up liquidity reserves is released back to the issuer, the company.

Douglas Campbell: A turbo structure is structurally simpler to rate and easier to sell because the collections on the assets remaining after paying service provider fees and interest on the notes and topping up liquidity reserve accounts are used to repay principal to investors. As a result, the investors get their money back faster as the level of overall collateralization increases during the life of the deal. A residual cash flow structure does quite the opposite. Rather than using all the collections remaining to repay principal on notes, the issuer repays principal on the notes only in an amount necessary to achieve a targeted level of over-collateralization. Once that level is met, the funds remaining each month after paying the provider fees, interest, and principal on the notes and topping up liquidity reserves is released back to the issuer, the company.

Speaker #2: As a result , the investors get their money back faster as the level of overall collateralization increases during the life of the deal .

Speaker #2: A residual cash flow structure does quite the opposite . Rather than using all the collections remaining to repay principal on notes . The issuer repays principal on the notes only in an amount necessary to achieve a targeted level of over .

Speaker #2: Once that level is met, the funds remaining each month after paying the provider fees and interest and principal on the notes and topping up liquidity reserves is released back to the issuer.

Speaker #2: The company . The company's ability to complete this 25 four transaction with residual cash flow structure can be viewed as a sign of investor and rating agency confidence in the company and its asset backed securitization program , which is particularly noteworthy in light of the heightened sensitivity and the market stress plaguing the securitization markets .

Doug Campbell: The company's ability to complete this 2025-4 transaction with residual cash flow structure can be viewed as a sign of investor and rating agency confidence in the company and its asset-backed securitization program, which is particularly noteworthy in light of the heightened sensitivity and the market stress plaguing the securitization markets at the end of 2025. We've made meaningful progress on the transformation of our capital structure this fiscal year, and I want to recognize that even as I acknowledge there's more to do. In October, we closed a $300 million term loan, which fully retired our revolving line of credit and removed the income statement covenants that had previously limited our operating flexibility.

Douglas Campbell: The company's ability to complete this 2025-4 transaction with residual cash flow structure can be viewed as a sign of investor and rating agency confidence in the company and its asset-backed securitization program, which is particularly noteworthy in light of the heightened sensitivity and the market stress plaguing the securitization markets at the end of 2025. We've made meaningful progress on the transformation of our capital structure this fiscal year, and I want to recognize that even as I acknowledge there's more to do. In October, we closed a $300 million term loan, which fully retired our revolving line of credit and removed the income statement covenants that had previously limited our operating flexibility.

Speaker #2: In the end of 2025 . We've made meaningful progress on the transformation of our capital structure this fiscal year , and I want to recognize that even as I acknowledge there's more to do .

Speaker #2: In October , we closed a $300 million term loan , which fully retired our revolving line of credit and removed the income state covenants that had previously limited our operating flexibility In December , we completed this 25 for ABS transaction with a residual cash flow structure that delivers monthly cash flows to the company , improving capital efficiency and reducing our long term cost of capital .

Doug Campbell: In December, we completed this 2025-4 ABS transaction with a residual cash flow structure that delivers monthly cash flows to the company, improving capital efficiency and reducing our long-term cost of capital. These are real milestones. The ABS markets remain a viable and productive funding source for us throughout this period, and we intend to continue accessing it on a regular cadence. However, the capital markets is not without their challenges, elevated rates, a complex macro backdrop, and the heightened scrutiny that followed the industry disruptions I mentioned. We have demonstrated that we can execute in that market. The critical remaining step is securing a revolving warehouse facility. That is the bridge financing that connects the origination to securitizations and will allow us to fully serve the demand that we're seeing. We're actively working on this, and we will update you when we have something definitive to share.

Douglas Campbell: In December, we completed this 2025-4 ABS transaction with a residual cash flow structure that delivers monthly cash flows to the company, improving capital efficiency and reducing our long-term cost of capital. These are real milestones. The ABS markets remain a viable and productive funding source for us throughout this period, and we intend to continue accessing it on a regular cadence. However, the capital markets is not without their challenges, elevated rates, a complex macro backdrop, and the heightened scrutiny that followed the industry disruptions I mentioned. We have demonstrated that we can execute in that market. The critical remaining step is securing a revolving warehouse facility. That is the bridge financing that connects the origination to securitizations and will allow us to fully serve the demand that we're seeing. We're actively working on this, and we will update you when we have something definitive to share.

Speaker #2: These are real milestones . The ABS markets remain a viable and productive funding source for us throughout this period , and we intend to continue accessing it on a regular cadence However , the capital markets is not without their challenges Elevated rates , a complex macro backdrop , and the heightened scrutiny that followed the industry disruptions I mentioned .

Speaker #2: But we have demonstrated that we can execute in that market . The critical remaining step is securing a revolving warehouse facility that is the bridge financing that connects the origination to securitizations and will allow us to fully serve the demand that we're seeing .

Speaker #2: We're actively working on this, and we will update you when we have something definitive to share. Until that facility is in place, volumes will remain below what our demand and team are capable of producing. While we have been working on our capital transition, we've also been executing on the operational side.

Doug Campbell: Until that facility is in place, volumes will remain below what our demand and team are capable of producing. While we have been working on our capital transition, we've also been executing on the operational side. We've executed phase one and phase two of our SG&A cost control plan, which included a reduction in workforce and store consolidations, which are now complete. 18 total locations have been rationalized, and our active store count now stands at 136. These consolidations are not just about reducing cost. They were about concentrating resources and inventory to our strongest performing locations so that when volume recovers, we can recover into a more productive and efficient footprint. The financial benefits of these consolidations are expected to be reflected in Q4 as full run rate savings flow through the P&L.

Douglas Campbell: Until that facility is in place, volumes will remain below what our demand and team are capable of producing. While we have been working on our capital transition, we've also been executing on the operational side. We've executed phase one and phase two of our SG&A cost control plan, which included a reduction in workforce and store consolidations, which are now complete. 18 total locations have been rationalized, and our active store count now stands at 136. These consolidations are not just about reducing cost. They were about concentrating resources and inventory to our strongest performing locations so that when volume recovers, we can recover into a more productive and efficient footprint. The financial benefits of these consolidations are expected to be reflected in Q4 as full run rate savings flow through the P&L. With that, I'll turn it over to Jamie for the operational detail.

Speaker #2: We've executed phase one and phase two of our sG&A cost control plan , which included a reduction in workforce and store consolidations , which are now complete 18 total locations have been rationalized , and our active store count now stands at 136 .

Speaker #2: These consolidations are not just about reducing costs . They were about concentrating resources and inventory to our strongest performing locations so that when volume recovers , we can recover into more productive and efficient footprint .

Speaker #2: The financial benefits of these consolidations are expected to be reflected in the fourth quarter , as full run rate savings flow through the PNL .

Doug Campbell: With that, I'll turn it over to Jamie for the operational detail.

Speaker #2: And with that , I'll turn it over to Jamie for the operational detail

Jamie Fischer: Thanks, Doug. You've outlined the capital structure context and its impact on volumes. Let me now provide the operational detail behind those results, as there are a few dynamics worth separating clearly. I'll start by sharing about Winter Storm Fern and its ripple effects on the operations of the business. To provide some context on the scale of that disruption, Winter Storm Fern was a significant weather event, not a routine weather day. The storm was an ice and snow event concentrated in the South Central US, which is precisely where our entire dealership network operates, meaning there was no part of our business that was insulated from its impact. Our entire operating footprint was closed, including our corporate office, for a period of three days. However, the effects extended well beyond these days.

Speaker #3: Thanks , Doug . You've outlined the capital structure context , and its impact on volumes . Let me now provide the operational detail behind those results , as there are a few dynamics worth separating .

Speaker #3: Clearly I'll start by sharing about Winter storm Fern and its ripple effects on the operations of the business . To provide some context on the scale of that disruption , winter storm Fern was a significant weather event , not a routine weather day .

Speaker #3: The storm was an ice and snow event concentrated in the south central U.S. , which is precisely where our entire dealership network operates , meaning there was no part of our business that was insulated from its impact .

Speaker #3: Our entire operating footprint was closed , including our corporate office , for a period of three days . However , the effects extended well beyond these days .

Jamie Fischer: The residual impact of excessively cold temperatures, infrastructure damage, and supply chain disruptions in the aftermath meant partial closures, delayed reopenings, and operational constraints, which included closed wholesale auctions in our markets, halting our ability to dispose of inventory, disruptions to vehicle transportation preventing us from moving vehicles. Repair and reconditioning timelines extended well after we reopened as part supply chains experienced storm-related delays. Critically, our customers' ability to make payments and our associates' ability to collect them were both meaningfully impacted during and after the storm. We will speak to those specific impacts as we move through the operational discussion, but we wanted to frame the magnitude of the event so the results can be viewed in their proper context. As Doug noted in his remarks, retail units sold decreased 22.1% to 10,275 units.

Speaker #3: The residual impact of excessively cold temperatures , infrastructure damage and supply chain disruptions in the aftermath meant partial closures delayed reopenings and operational constraints , which included closed wholesale auctions .

Speaker #3: In our markets , halting our ability to dispose of inventory disruptions to vehicle transportation , preventing us from moving vehicles , repair and reconditioning timelines , extended well after we reopened as part supply chains experienced storm related delays and critically , our customers ability to make payments and are associates ability to collect them were both meaningfully impacted during and after the storm We will speak to those specific impacts as we move through the operational discussion , but we wanted to frame the magnitude of the event .

Speaker #3: So the results can be viewed in the proper context. As Doug noted in his remarks, retail units sold decreased 22.1% to 10,275 units.

Jamie Fischer: The decline in sales volume was driven by three primary factors, lower inventory availability across the quarter, a 12% smaller footprint versus prior year, and Winter Storm Fern. Total revenue was $286.8 million, down 12% year-over-year, while average retail sales price increased 7.1% year-over-year to $20,634. The revenue was partially offset by improved gross margin and interest income. Interest income was $64.2 million, up 3.1% year-over-year, supported by the continued strong performance of the existing portfolio. Despite lower volumes, gross profit per retail unit sold was up 8.8%, outpacing the vehicle sales price increase, indicating that we also achieved a 1.9% improvement in underlying unit cost.

Speaker #3: The decline in sales volume was driven by three primary factors: lower inventory availability across the quarter, a 12% smaller footprint versus prior year, and winter storm.

Speaker #3: Fern . Total revenue was $286.8 million , down 12% year over year While average retail sales price increased 7.1% year over year to $20,634 .

Speaker #3: The revenue was partially offset by improved gross margin and interest income . Interest income was $64.2 million , up 3.1% year over year , supported by the continued strong performance of the existing portfolio .

Speaker #3: Despite lower volumes , gross profit per retail unit sold was up 8.8% , outpacing the vehicle sales price increase , indicating that we also achieved a 1.9% improvement in underlying unit cost .

Jamie Fischer: That cost discipline was driven by continued progress in vehicle quality as reflected in lower service contract repair costs. Inventory levels bottomed in December, which corresponded with our lowest sales volume of the quarter. We began rebuilding inventory in January in preparation for tax season, and that investment began to show. Sales volumes were improving throughout the month before Winter Storm Fern tempered the recovery right at quarter end. By the time tax season kicked off in February, inventory had increased 44% from the December bottom, providing a meaningfully stronger foundation than our quarter end numbers alone would suggest. That said, sustaining the inventory build trajectory is dependent upon the completion of our warehouse facility, which will enable us to normalize the pace and scale of ongoing inventory purchases going forward.

Speaker #3: That cost discipline was driven by continued progress in vehicle quality , as reflected in lower service contract repair costs Inventory levels bottomed in December , which corresponded with our lowest sales volume of the quarter .

Speaker #3: We began rebuilding inventory in January in preparation for tax season , and that investment began to show sales volumes were improving throughout the month before winter storm Fern tempered the recovery right at quarter end .

Speaker #3: By the time tax season kicked off in February , inventory had increased 44% from the December bottom , providing a meaningful , stronger , meaningfully stronger foundation than our quarter end numbers alone would suggest .

Speaker #3: That said , sustaining the inventory build trajectory is dependent on . Upon the completion of our warehouse facility , which will enable us to normalize the pace and scale of ongoing inventory purchases going forward Pay your way .

Jamie Fischer: Pay Your Way adoption continues to expand in ways that matter for the long-term economics of the business. Since launch in Q1, we've seen more than a 250% increase in customers enrolled in automatic recurring payments, and approximately 65% of payment transactions are now consistently made remotely, a level that has stabilized since Q2. One highlight worth calling out is how the platform performed during Winter Storm Fern. In response to storm-related disruptions, we temporarily suspended remote payment fees to assist our customers and saw a significant increase in remote payment activity as a result. Historically, a weather event of this magnitude would have required us to wait for normal store operations to resume before we could meaningfully reengage collections.

Speaker #3: Adoption continues to expand in ways that matter for the long term . Economics of the business . Since launch in quarter one , we've seen more than a 250% increase in customers enrolled in automatic recurring payments .

Speaker #3: An approximately 65% of payment transactions are now consistently made remotely , a level that has stabilized since Q2 . One highlight worth calling out is how the platform performed during Winter storm Fern in response to storm related disruptions , we temporarily suspended remote payment fees to assist our customers and saw a significant increase in remote payment activity as a result Historically , a weather event of this magnitude would have required us to wait for normal store operations to resume before we could meaningfully re-engage collections Pay your way fundamentally changed that dynamic , giving us the ability to maintain business continuity while simultaneously giving our customers the convenience and peace of mind to make payments on their own terms .

Jamie Fischer: Pay Your Way fundamentally changed that dynamic, giving us the ability to maintain business continuity while simultaneously giving our customers the convenience and peace of mind to make payments on their own terms during an otherwise disruptive period. That is a direct proof point for what our upgraded digital payment infrastructure means for our business resilience, and it gives us confidence in the platform's long-term value. On the Salesforce collection CRM, we scaled significantly during Q3, moving from a three-store pilot at the end of Q2 to approximately 15% of our store base live on the platform by quarter end. Achieving full chain-wide adoption remains the prerequisite to entering phase three of our SG&A cost control strategy as we expect rapid expansion as we moved into the new fiscal year. Finally, on our SG&A cost control strategy, the consolidation operation was a deliberate and carefully managed process.

Speaker #3: During an otherwise disruptive period That is a direct proof point for what our upgraded digital payment infrastructure means for our business resilience , and it gives us confidence in the platform's long term value on the Salesforce Collection CRM , we scaled significantly during Q3 , moving from a three store pilot at the end of Q2 to approximately 15% of our store base live on the platform by quarter end , achieving full chain wide adoption remains the prerequisite to entering phase three of our sG&A cost control strategy , as we expect , rapid expansion as we moved into the new fiscal year Finally , on our sG&A cost control strategy , the consolidation operation was a deliberate and carefully managed process , integrating thousands of customer accounts into nearby locations while ensuring our associates have the support needed to maintain continuity of service throughout the transition That level of intentionality is reflected in early results collections , performance at phase one , inheriting locations is tracking in line with the rest of the company , which we view as meaningful proof that the integration was executed well It is too early to draw similar conclusions from phase two as those consolidations occurred midway through January , but we're encouraged by the phase one trajectory and will continue to monitor phase two performance closely as those locations mature into their new footprints Jonathan , I'll now turn it over to you .

Jamie Fischer: Integrating thousands of customer accounts into nearby locations while ensuring our associates have the support needed to maintain continuity of service throughout the transition. That level of intentionality is reflected in early results. Collections performance at phase one inheriting locations is tracking in line with the rest of the company, which we view as meaningful proof that the integration was executed well. It is too early to draw similar conclusions from phase two as those consolidations occurred midway through January. We're encouraged by the phase one trajectory and will continue to monitor phase two performance closely as those locations mature into their new footprint. Jonathan, I'll now turn it over to you.

Jonathan Collins: Thank you, Jamie. SG&A totaled $51.5 million for the quarter, or 23.1% of reported sales. The current quarter included approximately $2.8 million of non-recurring impairment and restructuring charges related to the phase two store consolidations. Excluding these items, adjusted SG&A was $48.7 million or 21.9% of sales. To put that 21.9% in context, the gap versus our 16.5% of long-term target is almost entirely a volume denominator issue. We've taken significant fixed cost out, but those savings become most visible at normalized origination levels. As Doug and Jamie mentioned, phase one and phase two together eliminated 18 locations from our footprint. These consolidations also removed meaningful costs from both our field and corporate structure, and the associated savings are expected to be reflected beginning in Q4.

Speaker #1: Thank you . Jamie . As totaled 51.5 million for the quarter or 23.1% of reported sales . The current quarter included approximately 2.8 million of non-recurring impairment and restructuring charges related to the phase two store consolidations Excluding these items , adjusted sG&A was 48.7 million , or 21.9% of sales .

Speaker #1: To put that , 21.9% in context , the GAAP versus our 16.5% of long term target is almost entirely a volume denominator issue .

Speaker #1: We've taken significant fixed cost out , but those savings become most visible at normalized origination levels . As Doug and Jamie mentioned , phase one and phase two together eliminated 18 locations from our footprint .

Speaker #1: These consolidations also removed meaningful costs from both our field and corporate structure , and the associated savings are expected to be reflected beginning in the fourth quarter .

Jonathan Collins: Our guiding principle is straightforward. Our cost structure must match our volume and receivable space. We will not wait passively for volume to recover. If our top line requires a different expense profile, we will take the necessary actions to align accordingly. We continue to evaluate opportunities for further efficiency across the business. Turning to credit performance. Underlying credit performance remained stable throughout the quarter. Net charge-offs as a percentage of average finance receivables were 6.5% compared to 6.1% in the prior quarter. Two dynamics explain the headline increase. First, a denominator effect. Slower origination growth has reduced the average finance receivables, which mechanically puts upward pressure on the charge-off rate even without a change in underlying loss behavior. Second is portfolio mix.

Speaker #1: Our guiding principle is straightforward: our cost structure must match our volume and receivables base. We will not wait passively for volume to recover.

Speaker #1: If our top line requires a different expense profile , we will take the necessary actions to align accordingly . We continue to evaluate opportunities for further efficiency across the business Turning to credit performance , underlying credit performance remained stable throughout the quarter .

Speaker #1: Net charge offs as a percentage of average finance receivables were 6.5% , compared to 6.1% in the prior quarter . Two dynamics explained the headline increase First , a denominator effect .

Speaker #1: Slower origination growth has reduced the average finance receivables, which mechanically puts upward pressure on the charge-off rate, even without a change in underlying loss behavior.

Speaker #1: Second is portfolio mix. Required locations purchased over the last few years now represent approximately 13% of our portfolio and are maturing into their expected loss curves.

Jonathan Collins: Acquired locations purchased over the last few years now represent approximately 13% of our portfolio and are maturing into their expected loss curves. The modest year-over-year increase in loss frequency was driven almost entirely by these locations. Core legacy locations were essentially flat. Loss severity also remained flat, and losses per dollar of principal were slightly improved. This is consistent with our underwriting expectation and does not reflect credit deterioration. These dynamics, combined with Winter Storm Fern, influenced the quarter's headline metrics. What matters most is whether the underlying portfolio is getting healthier, and it is. Our highest credit tier customers now represent 66.7% of accounts receivable, up from 62.8% a year ago. Contracts originated under LOS continue to represent a growing share of the portfolio, and those vintages are performing as expected.

Speaker #1: The modest year over year increase in loss frequency was driven almost entirely by these locations . Core legacy locations were essentially flat . Loss severity also remained flat , and losses per dollar of principal were slightly improved .

Speaker #1: This is consistent with our underwriting expectation and does not reflect credit deterioration. These dynamics, combined with Winter Storm Fern, influence the quarter.

Speaker #1: The quarter's headline metrics what matters most is whether the underlying portfolio is getting healthier , and it is our highest credit to your customers .

Speaker #1: Now represents 66.7% of accounts receivable , up from 62.8% a year ago Contracts originated under loss , continue to represent a growing share of the portfolio , and those vintages are performing as expected on current origination quality this quarter .

Jonathan Collins: On current origination quality this quarter, our highest quality tier, rank 7 customers, maintained its share at 18.4%, essentially flat from Q2. In a volume-constrained environment, we focused on retaining the strongest deal structures, appropriate down payments, affordable monthly payments, and customer equity rather than stretching to close weaker deals. This was true across all customer segments. The volume decline was concentrated in transactions with less favorable financial terms, regardless of the customer's credit profile. Our LOSV2 platform enabled this discipline by helping field teams identify and prioritize the strongest deal structures available. On delinquencies, our 30-day+ metric was elevated at quarter end due to the timing of Winter Storm Fern, which struck in the final week of January.

Speaker #1: Our highest quality tier ranked seven customers maintained its share at 18.4% , essentially flat from Q2 in a volume constrained environment . We focused on retaining the strongest deal structures appropriate down payments , affordable monthly payments , and customer equity , rather than stretching to close weaker deals .

Speaker #1: This was true across all customer segments . The volume decline was concentrated in transactions with less favorable financial terms . Regardless of the customer's credit profile Our loss V2 platform enabled this discipline by helping field teams identify and prioritize the strongest deal structures available on delinquencies .

Speaker #1: Our 30 day plus metric was elevated at quarter end due to the timing of winter storm Fern , which struck in the final week of January Accounts over 30 days past due increased to 4.4% from 3.7% , but the storm's impact extended beyond customers , who were already delinquent .

Jonathan Collins: Accounts over 30 days past due increased to 4.4% from 3.7%, but the storm's impact extended beyond customers who were already delinquent. It affected payment behavior across the portfolio. Our recency percentage, excluding 1- to 2-day grace period accounts, declined to 71.4% from 81.3%, reflecting the broad disruption to customers' ability to make timely payments during the storm. As Jamie mentioned, in response, we temporarily suspended remote payment fees while stores were closed, and our Pay Your Way platform allowed customers to continue making payments. Since the quarter end, we've seen meaningful normalization in both metrics. By mid-February, accounts over 30 days past due had improved to the 3.7% to 3.8% range. Despite the disruption, total collections were $179 million, up 1.5% year-over-year.

Speaker #1: It affected payment behavior across the portfolio . Our recency percentage , excluding 1 to 2 day grace period accounts , declined to 71.4% from 81.3% , reflecting the broad disruption to customers ability to make timely payments during the storm .

Speaker #1: As Jamie mentioned in response, we temporarily suspended remote payment fees while stores were closed, and our pay platform allowed customers to continue making payments.

Speaker #1: Since the quarter end, we've seen meaningful normalization in both metrics. By mid-February, accounts over 30 days past due had improved to the 3.7% to 3.8% range.

Speaker #1: Despite the disruption, total collections were $179 million, up 1.5% year over year. Cash collected as a percentage of average finance receivables improved 11 basis points year over year.

Jonathan Collins: Cash collected as a percentage of average finance receivables improved 11 basis points year-over-year. That improvement reflects both the quality of the portfolio and our team's execution. Average collected per active customer account per month was $581 compared to $568 in the prior year quarter, a 2.3% improvement that reflects continued portfolio health and the effectiveness of our Pay Your Way platform. Our allowance for credit losses as a percentage of finance receivables increased to 25.53% at 31 January 2026, compared to 24.31% at 31 January 2025. Importantly, this increase occurred while realized credit performance actually improved sequentially. Net charge-offs declined from $106 million to $96 million. Units charged off fell roughly from 10,300 to 9,200.

Speaker #1: That improvement reflects both the quality of the portfolio and our team's execution Average collected for active customer account per month was $581 , compared to $568 in the prior year quarter , a 2.3% improvement that reflects continued portfolio health and the effectiveness of our PUA platform Our allowance for credit losses as a percentage of finance receivables increased to 25.53% at January 31st , 2026 , compared to 24.31% at January 31st , 2025 .

Speaker #1: Importantly, this increase occurred while realized credit performance actually improved sequentially. Net charge-offs declined from $106 million to $96 million; units charged off fell roughly from 10,300 to 9,200.

Jonathan Collins: The reserve increase reflects the portfolio dynamics I described earlier, as well as the macroeconomic pressures that our customers face. As the receivable base contracts and the LOS portfolio seasons into expected loss curve, the allowance ratio rises even without deterioration and expected losses. At current levels, our reserve represents approximately 3.6 times quarterly charge-offs, and we believe this appropriately reflects the risk profile of the portfolio. Doug covered our capital structure transformation in detail, including the strategic importance of the December ABS transaction and the residual cash flow structure. Let me add the financial specifics. On the term loan, we closed $300 million in October, which we fully retired our revolving line of credit.

Speaker #1: The reserve increase reflects the portfolio dynamics I described earlier , as well as the macroeconomic pressures that our customers face as the receivable base contracts and the loss portfolio .

Speaker #1: Seasons into expected loss curve . The ratio of the allowance ratio rises even without deterioration and expected losses at current levels . Our reserve represents approximately 3.6 times quarterly charge offs , and we believe this appropriately reflects the risk profile of the portfolio Doug covered our capital structure , transformation in detail , including the strategic importance of the December ABS transaction and the residual cash flow structure .

Speaker #1: Let me add the financial specifics on the term loan . We closed 300 million in October , which we fully retired . Our revolving line of credit on the ABS side , the 2025 for transaction resulted in 161.3 million in asset backed notes at a weighted average coupon rate of 7.02% .

Jonathan Collins: On the ABS side, the 2025-4 transaction resulted in $161.3 million in asset-backed notes at a weighted average coupon rate of 7.02%. Turning to the balance sheet, total cash, including restricted cash, was $237 million at 31 January 2026, compared to $124.5 million at 30 April 2025. Total debt was $892.2 million debt. Net of total cash to finance receivables was 44.7% compared to 43.2% at 30 April 2025, a modest increase reflecting the full quarter impact of the term loan. As Doug emphasized, securing an additional financing source, such as a revolving warehouse facility, remains our critical next step in our capital structure transition.

Speaker #1: Turning to the balance sheet , total cash , including restricted cash , was $237 million at January 31st , 2026 , compared to 124.5 million at April 30th , 2025 .

Speaker #1: Total debt was 892.2 million . Debt , net of total cash to finance receivables was 44.7% , compared to 43.2% at April 30th , 2025 .

Speaker #1: A modest increase reflecting the full quarter impact of the term loan . As Doug emphasized , securing an additional financing source , such as a revolving warehouse facility , remains our critical next step in our capital structure transition Interest expense for the quarter was 21.8 million , or 9.8 million of sales , 9.8% of sales , compared to 16.9 million and 6.4% in the prior year quarter .

Jonathan Collins: Interest expense for the quarter was $21.8 million or 5.8% of sales compared to $16.9 million and 6.4% in the prior year quarter. The increase reflects the full quarter impact of the $300 million term loan. On a nine-month basis, interest expense was $54.5 million compared to $53.3 million in the prior year period. That's a much more modest increase reflecting favorable ABS coupon improvements we've realized this fiscal year. As origination volumes recover and a larger share of our funding comes through residual structure ABS transactions, we expect the blended cost of our capital to decline and interest expense as a percentage of revenue to improve. Turning to taxes, during the quarter, we recognized a non-cash income tax charge of $47 million.

Speaker #1: The increase reflects the full quarter impact of the $300 million term loan on a nine month basis Interest expense was 54.5 million , compared to 53.3 million in the prior year period .

Speaker #1: That's a much more modest increase , reflecting favorable ABS coupon improvements . We've realized this fiscal year as origination volumes recover in a larger share of our funding comes through residual structure , ABS transactions .

Speaker #1: We expect the blended cost of our capital to decline, and interest expense as a percentage of revenue to improve. Turning to taxes, during the quarter, we recognized a non-cash income tax charge of $47 million.

Jonathan Collins: This charge establishes a full valuation allowance against our deferred tax asset associated with the net operating losses at Colonial Auto Finance. Under GAAP, we are required to assess all available evidence when making this determination, and that evidence includes three years of cumulative pre-tax losses at Colonial Auto Finance. I want to be clear about what this does and does not mean. This allowance has no impact on our cash tax position. It also does not affect our ability to utilize net operating loss carryforwards in an event of a return to profitability. It's an accounting adjustment, not an economic change. Finally, on earnings per share, loss per share for the quarter was $9.25 on a GAAP basis. The loss included three significant non-cash and non-recurring items. First, the $47 million tax asset valuation allowance I just described.

Speaker #1: This charge establishes a full valuation allowance against our deferred tax asset associated with the net operating losses at Colonial Auto Finance under GAAP .

Speaker #1: We are required to assess all available evidence when making this determination, and that evidence includes three years of cumulative pre-tax losses at Colonial Auto Finance.

Speaker #1: I want to be clear about what this does and does not mean this allowance has no impact on our cash tax position . It also does not affect our ability to utilize net operating loss .

Speaker #1: Carryforwards in an event of a return to profitability is an accounting adjustment , not an economic change . And finally , on earnings per share loss per share for the quarter was $9.25 .

Jonathan Collins: Finally, on earnings per share, loss per share for the quarter was $9.25 on a GAAP basis. The loss included three significant non-cash and non-recurring items. First, the $47 million tax asset valuation allowance I just described. Second, $18.2 million in credit loss allowance adjustments reflecting the reserve build. Third, $2.8 million in asset impairment charges reflecting related to our Phase Two store consolidations. Adjusted for these items, adjusted loss per share was $1.53. With that, I'll turn it back to Doug.

Speaker #1: On a GAAP basis , the loss included three significant non-cash and non-recurring items . First , the $47 million tax asset valuation allowance I just described .

Jonathan Collins: Second, $18.2 million in credit loss allowance adjustments reflecting the reserve build. Third, $2.8 million in asset impairment charges reflecting related to our Phase Two store consolidations. Adjusted for these items, adjusted loss per share was $1.53. With that, I'll turn it back to Doug.

Speaker #1: Second , 18.2 million in credit loss allowance adjustments , reflecting the reserve build and third , 2.8 million in asset impairment charges , reflecting related to our phase two store consolidations Adjusted for these items , adjusted loss per share was $1.53 , with that , I'll turn it back to Doug

Doug Campbell: Thank you, Jonathan. Let me close with a few points that I wanna leave with investors this morning. The story of this quarter was straightforward. Volume was constrained by our capital structure transition, not by demand. That matters because it tells us the path forward. We're not rebuilding demand, we're not re-underwriting the portfolio, we don't have a broken business model. We're closing the final gap on our financing platform so that the demand that we already have can be served by operational infrastructure that we've already built and can generate the volumes that we're capable of. I wanna return briefly to the point I made in my opening because I think it's underappreciated. We executed a non-turbo residual cash flow ABS deal in December in one of the most difficult subprime capital market environments in recent memory, and the market priced our paper.

Douglas Campbell: Thank you, Jonathan. Let me close with a few points that I wanna leave with investors this morning. The story of this quarter was straightforward. Volume was constrained by our capital structure transition, not by demand. That matters because it tells us the path forward. We're not rebuilding demand, we're not re-underwriting the portfolio, we don't have a broken business model. We're closing the final gap on our financing platform so that the demand that we already have can be served by operational infrastructure that we've already built and can generate the volumes that we're capable of. I wanna return briefly to the point I made in my opening because I think it's underappreciated. We executed a non-turbo residual cash flow ABS deal in December in one of the most difficult subprime capital market environments in recent memory, and the market priced our paper.

Speaker #2: Thank you . Jonathan . Let me close with a few points that I want to leave with investors this morning . The story of this quarter was straightforward .

Speaker #2: Volume was constrained by our capital structure transition, not by demand. That matters because it tells us the path forward. We're not rebuilding demand.

Speaker #2: We're not underwriting the portfolio . We don't have a broken business model . We're closing the final gap in our financing platform so that the demand that we already have can be served by operational infrastructure that we've already built and can generate the volumes that we're capable of And I want to return briefly to the point I made in my opening , because I think it's underappreciated .

Speaker #2: We executed a non-turbo residual cash flow ABS deal in December in one of the most difficult subprime capital market environments in recent memory, and the market priced our paper, the market accepted our structure.

Doug Campbell: The market accepted our structure. That doesn't happen unless people on the other side of the trade trust what's in the portfolio. That trust has been earned over time and is the foundation on which we'll build the rest of the capital structure. Let me be direct on where we stand with the warehouse facility and what makes it genuinely difficult to predict timing. We've identified partners. The conversations are very active and substantive. Completing a warehouse facility in the current environment requires aligning multiple stakeholders, each with their own view of risk, their own obligations, and their own timelines. In a normal market, that alignment moves quickly. In this market, it moves deliberately, and we respect that because the parties that we're working with are being appropriately careful.

Douglas Campbell: The market accepted our structure. That doesn't happen unless people on the other side of the trade trust what's in the portfolio. That trust has been earned over time and is the foundation on which we'll build the rest of the capital structure. Let me be direct on where we stand with the warehouse facility and what makes it genuinely difficult to predict timing. We've identified partners. The conversations are very active and substantive. Completing a warehouse facility in the current environment requires aligning multiple stakeholders, each with their own view of risk, their own obligations, and their own timelines. In a normal market, that alignment moves quickly. In this market, it moves deliberately, and we respect that because the parties that we're working with are being appropriately careful.

Speaker #2: That doesn't happen unless people on the other side of the trade trust what's in the portfolio. That trust has been earned over time, and it's the foundation on which we'll build the rest of the capital. Let me be direct in where we stand with the warehouse facility and what makes it genuinely difficult to predict timing.

Speaker #2: We've identified partners , the conversations are very active and substantive , but completing a warehouse facility in the working in the current environment requires aligning multiple stakeholders , each with their own view of risk , their own obligations , their own timelines .

Speaker #2: In a normal market , that alignment moves quickly in this market , it moves deliberately , and we respect that because the parties that we're working with are being appropriately careful Our job is to give them every reason to say yes through our credit performance , through our leadership , our transparency and our operational discipline .

Doug Campbell: Our job is to give them every reason to say yes through our credit performance, through our leadership, our transparency, and our operational discipline, and we're doing that work. I wanna be radically transparent with our investors. The path to closing is not determined by us alone. It requires simultaneous agreement across parties whose cooperation we're actively cultivating but cannot unilaterally compel. That is an honest description of where we are. We are managing, excuse me, this business with clear eyes about our options. If market conditions and counterparty timing require us to operate more conservatively, concentrating our resources for collections or deferring origination growth or making structural decisions about our footprint that further reduce our cash obligations, we have the framework and the willingness to do that. Some of those decisions, if required, are reversible when conditions improve. Some are not.

Douglas Campbell: Our job is to give them every reason to say yes through our credit performance, through our leadership, our transparency, and our operational discipline, and we're doing that work. I wanna be radically transparent with our investors. The path to closing is not determined by us alone. It requires simultaneous agreement across parties whose cooperation we're actively cultivating but cannot unilaterally compel. That is an honest description of where we are. We are managing, excuse me, this business with clear eyes about our options. If market conditions and counterparty timing require us to operate more conservatively, concentrating our resources for collections or deferring origination growth or making structural decisions about our footprint that further reduce our cash obligations, we have the framework and the willingness to do that. Some of those decisions, if required, are reversible when conditions improve. Some are not.

Speaker #2: And we're doing that work . But I want to be radically transparent with our investors . The path to closing is not determined by us alone .

Speaker #2: It requires simultaneous agreement across parties whose cooperation we are actively cultivating, but cannot unilaterally compel. That is an honest description of where we are.

Speaker #2: We are managing Excuse me , this business with clear eyes about our options . If market conditions and counterparty timing require us to operate more conservatively , concentrating our resources for collections or deferring origination growth , or making structural decisions about our footprint , that further reduce our cash obligations , we have the framework and the willingness to do that .

Speaker #2: Some of those decisions , if required , are reversible . When conditions improve , some are not . We'll make the irreversible ones carefully and only when necessary .

Doug Campbell: We'll make the irreversible ones carefully and only when necessary. I want investors to understand we're not waiting passively for a solution. We're actively managing our resource space to preserve optionality and ensure this business has the runway it needs to reach the outcome that we believe is achievable. Our near-term priorities are clear. First and foremost, close a warehouse facility. That is the singular focus. Everything else matters. Normalized origination capacity, volume recovery, and managing our SG&A, but it all flows from that. Second, volume recovery for inventory has already begun building, as Jamie mentioned earlier, ahead of the tax season and from our December low point. The tax season demand is real from our customers, and we intend to serve it as well as our capital position allows. The third is cost structure. We're a leaner organization today than we were 12 months ago.

Douglas Campbell: We'll make the irreversible ones carefully and only when necessary. I want investors to understand we're not waiting passively for a solution. We're actively managing our resource space to preserve optionality and ensure this business has the runway it needs to reach the outcome that we believe is achievable. Our near-term priorities are clear. First and foremost, close a warehouse facility. That is the singular focus. Everything else matters. Normalized origination capacity, volume recovery, and managing our SG&A, but it all flows from that. Second, volume recovery for inventory has already begun building, as Jamie mentioned earlier, ahead of the tax season and from our December low point. The tax season demand is real from our customers, and we intend to serve it as well as our capital position allows. The third is cost structure. We're a leaner organization today than we were 12 months ago.

Speaker #2: But I want investors to understand we're not waiting passively for a solution . We're actively managing our resource base to preserve optionality and ensure this business has the runway it needs to reach the outcome that we believe is achievable .

Speaker #2: Our near-term priorities are clear . First and foremost , close the warehouse facility that is the singular focus . Everything else matters . Normalize origination capacity , volume recovery , managing our G&A .

Speaker #2: But it all flows from that second volume recovery for inventory has already begun building . As Jamie mentioned earlier , ahead of the tax season and from our December low point , the tax season demand is real from our customers , and we intend to serve it as well as our capital position .

Speaker #2: Allow us The third is cost structure . We're a leaner organization today than we were 12 months ago . The phase one and phase two consolidations and the reductions that we've already taken , those benefits are starting to flow through and will not be passive about our cost structure .

Doug Campbell: The phase one and phase two consolidations and the SG&A reductions that we've already taken, those benefits are starting to flow through. We'll not be passive about our cost structure. We have the willingness to align our expense base to our revenue environment, whatever that environment requires, and we will use those levers decisively if we need to. Fourth is continued quality of credit. The underlying credit story is a good one, and it's getting better. I also want to acknowledge the broader environment our customers are navigating, and I want to be honest that focus on our execution within our existing capital structure, not on tailwinds. Inflation remains elevated. The geopolitical backdrop, including the ongoing conflict abroad, carries the risk of additional pricing and supply shocks that could affect vehicle costs, fuel prices, and household budgets of our customers. We're not oblivious to that.

Douglas Campbell: The phase one and phase two consolidations and the SG&A reductions that we've already taken, those benefits are starting to flow through. We'll not be passive about our cost structure. We have the willingness to align our expense base to our revenue environment, whatever that environment requires, and we will use those levers decisively if we need to. Fourth is continued quality of credit. The underlying credit story is a good one, and it's getting better. I also want to acknowledge the broader environment our customers are navigating, and I want to be honest that focus on our execution within our existing capital structure, not on tailwinds. Inflation remains elevated. The geopolitical backdrop, including the ongoing conflict abroad, carries the risk of additional pricing and supply shocks that could affect vehicle costs, fuel prices, and household budgets of our customers. We're not oblivious to that.

Speaker #2: We have the willingness to align our expense base to our revenue environment, whatever that environment requires. And we will use those levers decisively if we need to. Fourth is continued quality of credit.

Speaker #2: The underlying credit story is a good one, and it's getting better. I also want to acknowledge the broader environment our customers are navigating, and I want to be honest that we're focused on our execution within our existing capital structure, not on tailwinds.

Speaker #2: Inflation remains elevated . The geopolitical backdrop , including the ongoing conflict abroad , carries the risk of additional pricing and supply shocks that could affect vehicle costs , fuel prices , household budgets of our customers .

Speaker #2: We're not oblivious to that . A persistent conflict doesn't resolve these pressures . It compounds them , and we're building a business that can perform in a very difficult environment , not one that requires conditions to improve in order to succeed Every decision we're making on cost inventory collections is calibrated on that reality .

Doug Campbell: A persistent conflict doesn't resolve these pressures, it compounds them. We're building a business that can perform in a very difficult environment, not one that requires conditions to improve in order to succeed. Every decision we're making on cost, inventory, collections is calibrated on that reality. Our customers are resilient. The need for reliable, affordable transportation doesn't diminish in a difficult economy. It tends to become more acute. Our markets are durable, and we're managing this business to serve it well across a range of different outcomes. Before I open the line for questions, I want to take a moment to thank our associates across the country who show up every single day for our customers and for each other, especially those who navigated Winter Storm Fern with professionalism and care.

Douglas Campbell: A persistent conflict doesn't resolve these pressures, it compounds them. We're building a business that can perform in a very difficult environment, not one that requires conditions to improve in order to succeed. Every decision we're making on cost, inventory, collections is calibrated on that reality. Our customers are resilient. The need for reliable, affordable transportation doesn't diminish in a difficult economy. It tends to become more acute. Our markets are durable, and we're managing this business to serve it well across a range of different outcomes. Before I open the line for questions, I want to take a moment to thank our associates across the country who show up every single day for our customers and for each other, especially those who navigated Winter Storm Fern with professionalism and care.

Speaker #2: Our customers are resilient . The need for affordable transportation doesn't diminish in a difficult economy . It tends to become more acute . Our markets are durable and we're managing this business to serve it well across a range of different outcomes Before I open the line for questions , I want to take a moment to thank our associates across the country who show up every single day for our customers and for each other , especially those who navigated Winter storm Fern with professional professionalism and care .

Doug Campbell: I also want to thank our customers who've trusted us with their transportation needs and their payments, often in very difficult personal circumstances. I want to thank our investors and analysts for their continued engagement and patience as we work through this transition. We believe in what we're building. We have the team, the platform, and once the warehouse facility is in place, our capital structure to execute. We're not done, but we're clear on what needs to happen next. With that, I'll hand it back to the operator to open the line for questions.

Douglas Campbell: I also want to thank our customers who've trusted us with their transportation needs and their payments, often in very difficult personal circumstances. I want to thank our investors and analysts for their continued engagement and patience as we work through this transition. We believe in what we're building. We have the team, the platform, and once the warehouse facility is in place, our capital structure to execute. We're not done, but we're clear on what needs to happen next. With that, I'll hand it back to the operator to open the line for questions.

Speaker #2: I also want to thank our customers who trusted us with their transportation needs and their payments . Often in very difficult personal circumstances .

Speaker #2: And I want to thank our investors and analysts for their continued engagement and patience as we work through this transition . We believe in what we're building .

Speaker #2: We have the team , the platform , and once the warehouse facility in place , our capital structure to execute , we're not done .

Speaker #2: But we're clear on what needs to happen next . And with that , I'll hand it back to the operator to open the line for questions .

Operator 1: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from John Hecht of Jefferies. Your line is open.

Operator: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from John Hecht of Jefferies. Your line is open.

Speaker #4: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced.

Speaker #4: To withdraw your question , please press star one one again . Please stand by while we compile the Q&A roster And our first question comes from John Hecht of Jefferies .

Speaker #4: Your line is open

John Hecht: Morning, guys. Thanks very much for taking my question. Doug, you did talk about, you gave us a very, you know, deliberate update on the warehouse negotiations. I'm wondering, can you give us like what are the sticking points? Are they environmental, or is it just negotiating factors tied to the mechanics of the deal? I'm just kinda wondering if there's any other details you can provide us around that.

Speaker #5: Morning , guys . Thanks very much for taking my question Doug , you did talk about you gave us a very , you know , deliberate update on the warehouse negotiations .

Speaker #5: If you could give us, like, what are the sticking points? Are they environmental, or is it just negotiating factors tied to the mechanics of the deal?

Speaker #5: I'm just kind of wondering if there's any other details you can provide us around that

Doug Campbell: Good morning, John. Good to be with you. As I said before, I get the frustration with the lack of a specific timeline, but I wanna be direct without creating a sense of false certainty. We have identified partners. These conversations that we're in are very active and substantive, and that level of specificity does give us confidence that we're working towards a close. But it's difficult to predict timing, and that timing is structural. It's not motivational. All parties at the table wanna move forward. Completing this kind of financing arrangement requires like simultaneous agreement across multiple stakeholders. Each of them have complicated credit committee processes, their own view of risk in the market, as you mentioned, and then their own obligations. We can't close until we get all parties aligned.

Douglas Campbell: Good morning, John. Good to be with you. As I said before, I get the frustration with the lack of a specific timeline, but I wanna be direct without creating a sense of false certainty. We have identified partners. These conversations that we're in are very active and substantive, and that level of specificity does give us confidence that we're working towards a close. But it's difficult to predict timing, and that timing is structural. It's not motivational. All parties at the table wanna move forward. Completing this kind of financing arrangement requires like simultaneous agreement across multiple stakeholders. Each of them have complicated credit committee processes, their own view of risk in the market, as you mentioned, and then their own obligations. We can't close until we get all parties aligned.

Speaker #2: Good morning John . Good to be with you As I said before , I get the frustration with the lack of a specific timeline , but I want to be direct without creating a sense of false certainty We have identified partners .

Speaker #2: These conversations that we're in are very active and substantive , and that level of specificity does give us confidence that we're working towards a close .

Speaker #2: But it's difficult to predict timing . And that timing is structural . It's not motivational . All parties at the table want to move forward Completing this kind of financing arrangement requires like simultaneous , simultaneous agreement across multiple stakeholders , each of them have complicated credit committee processes , their own view of risk in the market .

Speaker #2: As you mentioned , and in their own obligations . But we can't close until we get all parties aligned . And as I mentioned , a environment that happens pretty quick .

Doug Campbell: As I mentioned, in a normal environment, that happens pretty quick. In this sort of environment, it takes what it takes, and especially what's given and happened in the subprime auto market over the last six months. Candidly, we respect that, and we want partners who've been appropriately rigorous. We think the testament of us entering the market and executing our 2025-4 transaction, they understand they're partnered with the right type of company and the right quality of receivables. You know, there are other factors that they're trying to measure and calculate for.

Douglas Campbell: As I mentioned, in a normal environment, that happens pretty quick. In this sort of environment, it takes what it takes, and especially what's given and happened in the subprime auto market over the last six months. Candidly, we respect that, and we want partners who've been appropriately rigorous. We think the testament of us entering the market and executing our 2025-4 transaction, they understand they're partnered with the right type of company and the right quality of receivables. You know, there are other factors that they're trying to measure and calculate for.

Speaker #2: In this sort of environment , it takes what it takes . And especially what's given and happened in the the subprime auto market over the last six months .

Speaker #2: And candidly , we respect that . And we want partners who've been appropriately rigorous . We think the testament of us entering the market and executing our 20 5-4 transaction , they understand their partnered with the right type of company and the right quality receivables .

Speaker #2: You know, but there are other factors that they're trying to measure and calculate for.

John Hecht: Okay. That's helpful. Then, you know, we're, I guess, in the early innings of tax refunds, and, you know, the expectations are they're generally larger this year. How are you seeing the effects of that at this point? Or I guess, is weather still a constraint? And how do you think about how that affects the sales in the coming months?

Speaker #5: Okay . That's helpful . And then , you know , we're , we're , I guess in the early but we're in the innings of tax refunds and , you know , the expectations are there .

Speaker #5: They're generally larger this year How are you seeing the effects of that at this point . Or I guess is weather still a constraint .

Speaker #5: And how do you think about how that affects the sales in the coming months

Doug Campbell: Sure. So as you've reported and others, the tax refund per consumer is up about 10%. The question is, like, what does that mean to us? Are we able to capitalize that? The early indicators, John, are that we are, deal structures are better. We have more down payments that we're collecting, and that we've seen throughout the month of February. The tax seasonal payments that we schedule here annually, we're at a high rate of collections. Those are all indicators that additional cash flow that the consumers have, which is an incremental $300 or $400, that we're getting a piece of that, and that, for the tax seasonal payments, that they're able to make those payments even more timely, given that the macro environment certainly hasn't improved since last year.

Douglas Campbell: Sure. So as you've reported and others, the tax refund per consumer is up about 10%. The question is, like, what does that mean to us? Are we able to capitalize that? The early indicators, John, are that we are, deal structures are better. We have more down payments that we're collecting, and that we've seen throughout the month of February. The tax seasonal payments that we schedule here annually, we're at a high rate of collections. Those are all indicators that additional cash flow that the consumers have, which is an incremental $300 or $400, that we're getting a piece of that, and that, for the tax seasonal payments, that they're able to make those payments even more timely, given that the macro environment certainly hasn't improved since last year.

Speaker #2: Sure . So as you've reported and others , the tax refund per consumer is up about 10% . The question is like , what does that mean to us ?

Speaker #2: Are we able to capitalize that ? And the early indicators are that we are deal structures are better . We have more down payments that we're collecting , and we've seen throughout the month of February and the tax seasonal payments that we schedule here annually , we're at a high rate of collections .

Speaker #2: And so, those are all indicators that that additional cash flow that the consumers have, which is an incremental $300 or $400, that we're getting a piece of that.

Speaker #2: And that for the tax seasonal payments, that they're able to make those payments even more timely, given that the macro environment certainly hasn't improved since last year.

Doug Campbell: One could argue that there was more risk going into this year, and I think that buffer helps create and insulate us a bit just based on the collection rates we're seeing. Those are favorable. In terms of the stores, all stores are back online since the storm and have been since 1 February.

Douglas Campbell: One could argue that there was more risk going into this year, and I think that buffer helps create and insulate us a bit just based on the collection rates we're seeing. Those are favorable. In terms of the stores, all stores are back online since the storm and have been since 1 February.

Speaker #2: And so one could argue that there was more risk going into this year . And I think that buffer helps create and insulate us a bit just based on the collection rates we're seeing .

Speaker #2: So those are favorable in terms of the stores . All stores are back online since the storm and have been since February 1st .

John Hecht: Great. Thank you guys very much.

Speaker #5: Great . Thank you guys very much .

Doug Campbell: You got it. Thank you, John.

Douglas Campbell: You got it. Thank you, John.

Speaker #2: You got it . Thank you John

Operator 2: Thank you. Our next question comes from Kyle Joseph of Stephens. Your line is open.

Operator: Thank you. Our next question comes from Kyle Joseph of Stephens. Your line is open.

Speaker #4: Thank you And our next question comes from Kyle Joseph of Stephens . Your line is open

Kyle Joseph: Hey, good morning, guys. Thanks for taking my questions. Just wanted to get a little more color on the unit decline. I know you guys. It was 22% and there were three primary factors. You know, between the factors, call it weather, inventory, and the smaller footprint, you know, like, how would you allocate that 22%? Is it fairly ratably across all three of those, or did one have a disproportionately large impact on sales in the quarter? Yeah, just following up on John and trying to get a better sense for how sales are trending in Q4.

Speaker #6: Hey , good morning guys . Thanks for taking my questions Just wanted to get a little more more color on the on the unit decline .

Speaker #6: I know you guys , it was 22% and there were three primary factors . You know , between the factors call it whether inventory and the smaller footprint , you know , like how would you allocate that 22% ?

Speaker #6: Is it fairly rapidly across all three of those , or did one have a disproportionately large impact on sales in the quarter ? Yeah , just following up on John and trying to get a better sense for how sales are trending in the fourth quarter .

Doug Campbell: Yeah. You know, first of all, good morning. Good to be with you. The inventory levels are the single biggest driving force there. With more inventory, we certainly would have sold more cars. Just given what we know, you know, we'd expect that to be sort of the number one driver. Number two, as Jamie mentioned, was Winter Storm Fern. For us, that hit right in the heart of our organization. From, you know, Alabama, Mississippi, burst pipes, stores out of commission, like, we sort of went through it all. Then the persistent cold weather following that, where schools were shut down for more than a week and the ice, et cetera, just meant consumers there really sort of.

Douglas Campbell: Yeah. You know, first of all, good morning. Good to be with you. The inventory levels are the single biggest driving force there. With more inventory, we certainly would have sold more cars. Just given what we know, you know, we'd expect that to be sort of the number one driver. Number two, as Jamie mentioned, was Winter Storm Fern. For us, that hit right in the heart of our organization. From, you know, Alabama, Mississippi, burst pipes, stores out of commission, like, we sort of went through it all. Then the persistent cold weather following that, where schools were shut down for more than a week and the ice, et cetera, just meant consumers there really sort of.

Speaker #2: Yeah . You know , first of all , good morning . Good to be with you . The the inventory levels are the inventory levels are the single biggest driving force there with more inventory .

Speaker #2: We certainly would have sold more cars . And so just given what we know , you know , we'd expect that to be sort of the number one driver .

Speaker #2: Number two, as Jamie mentioned, was winter storm Fern. And for us, that hit right in the heart of our organization.

Speaker #2: And from , you know , Alabama , Mississippi , Bursted Pipes , doors out of commission . Like we sort of went through it all .

Speaker #2: And then the persistent cold weather following that , where schools were shut down for more than a week and the ice , etc. , just meant consumers , they're really sort of , you know , when people think about that , they think people can't get to us .

Doug Campbell: You know, when people think about that, they think people can't get to us and shop, but that we also have to worry about the portfolio management, right? How they can get to us and make payments. Winter Storm Fern, certainly if you just sort of break down the impact for us, it was like an 8- or 9-day event. You know, that might be, you know, when looking at it, 8% or 9% of the quarter. If you're thinking about that as sort of 8% or 9% with no sales, and then you have, you know, what we would call a 12% smaller footprint, you could argue that that makes up for most of it, and that the performance we saw with the inventory that we did have was exceptional.

Douglas Campbell: You know, when people think about that, they think people can't get to us and shop, but that we also have to worry about the portfolio management, right? How they can get to us and make payments. Winter Storm Fern, certainly if you just sort of break down the impact for us, it was like an 8- or 9-day event. You know, that might be, you know, when looking at it, 8% or 9% of the quarter. If you're thinking about that as sort of 8% or 9% with no sales, and then you have, you know, what we would call a 12% smaller footprint, you could argue that that makes up for most of it, and that the performance we saw with the inventory that we did have was exceptional.

Speaker #2: And shop , but we also have to worry about the portfolio management , right ? And how they can get to us and make payments .

Speaker #2: And so Winter storm Fern , certainly if you just sort of break down the impact , for us , it was like an 8 or 9 day event .

Speaker #2: And so , you know , that might be , you know , one looking at it 8 or 9% of the quarter . And so if you're thinking about that as sort of 8 or 9% with no sales , and then you have , you know , what we would call a 12% smaller footprint , you could argue that that makes up for most of it and that the performance we saw with the inventory that we did have was exceptional .

Doug Campbell: I'm really proud of the team, and sort of what they've done. To me, the inventory piece is the largest opportunity. That's just based on the credit apps. We certainly could have served more customers with more inventory.

Douglas Campbell: I'm really proud of the team, and sort of what they've done. To me, the inventory piece is the largest opportunity. That's just based on the credit apps. We certainly could have served more customers with more inventory.

Speaker #2: And so I'm really proud of the team and sort of what they've done . But to me , the inventory piece is the largest opportunity there .

Speaker #2: And that's just based on the credit apps. We certainly could have served more customers with more inventory.

Kyle Joseph: Got it. Very helpful. Then, on a similar question, Jonathan, I think I picked up on it, but just kinda absent the storm, how you think delinquencies would have trended. I get the dynamics going on with charge-offs, but specifically on delinquencies, is there any way you could quantify the impact of the storm on DQs? I know the timing was right at the end of the quarter as well.

Speaker #6: Got it . Very helpful . And then on a similar question , Jonathan , I think I picked up on it , but just kind of the storm , how you , how you think delinquencies would have trended .

Speaker #6: I get the dynamics going on with with charge offs , but specifically on delinquencies . Is there any way you could quantify the impact of the storm on Dq's ?

Speaker #6: And I know the timing was right at the end of the quarter as well.

Jonathan Collins: Yeah. Hi. Good morning, Kyle. Difficult to say with precision. I think there's I would call out two things. One is by mid-February, delinquencies had pretty significantly come down. That was a very positive sign. It is true that coming out of the holidays, our customers are slightly more stressed than they are at any other time, and so we typically see a little bit elevated delinquencies. But, you know, adjusting for kind of seasonality, the winter storm definitely had an impact. Like I said, by mid-February, those had come down into what we would have normally expected the ranges to be.

Speaker #1: Yeah . Hi . Good morning Kyle . Difficult to say with precision , I think there's I would call out two things . One is by mid-February , delinquencies have pretty significantly come down .

Speaker #1: That was a very positive sign. It is true that coming out of the holidays, our customers are slightly more stressed than they are at any other time.

Speaker #1: And so we typically see a little bit elevated delinquencies , but , you know , adjusting for kind of seasonality , the winter storm definitely had an impact .

Speaker #1: And like I said, by mid-February, those had come down into what we would have normally expected the ranges to be.

Doug Campbell: The other thing, Jonathan, I'd add to that, you know, Jonathan called out this decline from our recency metric from 81% down to 71% or thereabouts. That sort of showed you that that wasn't related to just the 30-day, that was portfolio-wide. As he mentioned, those operating metrics have come well within line just a couple weeks later. Like, that's what we look at. The other side to that question, and for our more savvy investors, they would go, "Well, did that get flushed out in charge-offs?" The answer is no. Like, we didn't see any elevated charge-offs in the month of February, because you can certainly clean that up with write-offs, but that's not what happened either, so.

Douglas Campbell: The other thing, Jonathan, I'd add to that, you know, Jonathan called out this decline from our recency metric from 81% down to 71% or thereabouts. That sort of showed you that that wasn't related to just the 30-day, that was portfolio-wide. As he mentioned, those operating metrics have come well within line just a couple weeks later. Like, that's what we look at. The other side to that question, and for our more savvy investors, they would go, "Well, did that get flushed out in charge-offs?" The answer is no. Like, we didn't see any elevated charge-offs in the month of February, because you can certainly clean that up with write-offs, but that's not what happened either, so.

Speaker #2: The other thing , Jonathan , I'd add to that , you know , Jonathan called out this decline from our recency metric from 81% down to 71% or thereabouts , that sort of showed you that that wasn't related to just the 30 day .

Speaker #2: That was portfolio wide . And as he mentioned , those operating metrics have come well within line . Just a couple of weeks later .

Speaker #2: And so that's what we look at the other side to that question . And for our more savvy investors , they would go with , did that get flushed out in charge offs ?

Speaker #2: And the answer is no . Like we didn't see any elevated charge offs in the month of February , because you can certainly clean that up with write offs .

Speaker #2: But that's not what happened either . So

Kyle Joseph: Got it. Very helpful. One last one from me. I think on G&A, you guys, ex the one-time items, were running a little below $49 million for the quarter. You know, do you know how much more is left to take out of that, factoring in the incremental store closures and the RIF in Q3?

Speaker #6: Got it . Very helpful . One last one from me . I think on DNA , you guys x the one time items are running a little below 49 million for the quarter .

Speaker #6: And then you know , you know how much more is left to take out of that factoring in the incremental store closures in the riff in the third quarter

Jonathan Collins: We'll start to see the full impact of that starting this quarter. I mean, just as a reminder, we closed phase two stores in mid-January, and so from a quarterly perspective, you're not seeing really the savings. You're seeing the impact of kind of the impairment, but you're not seeing the savings flow through. We'll see that flow through starting in Q4.

Speaker #1: Yeah , we'll see the we'll start to see the full impact of that starting this quarter . I mean , just as a reminder , we closed phase two stores in mid January .

Speaker #1: And so from a quarterly perspective , you're not seeing really the savings . You're seeing the impact of kind of the impairment , but you're not seeing the savings flow through .

Speaker #1: So we'll see that flow through starting in Q4 .

Doug Campbell: Yeah. The important thing there also, Jonathan, you know, when we did these phased closures and consolidations, we did one in November, and we did the other one. It was the week of 13 January, so the week right before the storm. We largely didn't see the benefits of that. The $48.7 million, I wouldn't look at as the run rate. If I just sort of isolated, you know, January's alone, we're more in that $15–16 million range. Like, our expectation would to be somewhere between $45 and 46 million where we sit today, and there's still some things there that we're cleaning up and that we should see flow through the Q4 as well.

Douglas Campbell: Yeah. The important thing there also, Jonathan, you know, when we did these phased closures and consolidations, we did one in November, and we did the other one. It was the week of 13 January, so the week right before the storm. We largely didn't see the benefits of that. The $48.7 million, I wouldn't look at as the run rate. If I just sort of isolated, you know, January's alone, we're more in that $15–16 million range. Like, our expectation would to be somewhere between $45 and 46 million where we sit today, and there's still some things there that we're cleaning up and that we should see flow through the Q4 as well.

Speaker #2: Yeah , the important thing there also , Jonathan , you know , when we did these phased closures and consolidations , we did one in November and we did the other one , it was the week of January 13th .

Speaker #2: So the week right before the storm, and so we largely didn't see the benefits of that. So the $48.7 million, I wouldn't look at it as the run rate if I just sort of isolated.

Speaker #2: You know, January's alone, we're more in that $15, $16 million range. And so, like, our expectation would be to be somewhere between $45 and $46 million where we sit today.

Speaker #2: And there's still some things there that we're cleaning up, and we should see flow through the fourth quarter as well.

Kyle Joseph: Got it. Really helpful. Thanks for taking all my questions.

Speaker #6: Got it. Really helpful. Thanks for taking all my questions.

Doug Campbell: You got it. Thanks, Kyle.

Douglas Campbell: You got it. Thanks, Kyle.

Speaker #2: You got it .

Speaker #1: Thanks , Kyle .

Operator 1: Thank you. Our next question comes from Vincent Caintic of BTIG. Your line is open.

Operator: Thank you. Our next question comes from Vincent Caintic of BTIG. Your line is open.

Speaker #4: Thank you. And our next question comes from Vincent Kaantech of BTIG. Your line is open.

Vincent Caintic: Hey, good morning. Thanks for taking my questions. I do appreciate all the detail and directness with the transparency here. On the inventory, I see they're down 30% year-over-year in this quarter. I guess if you could maybe talk about where we are now, in February and March, how have those trended. Have you been able to get that. It sounds like you've been able to get some inventories back, so maybe if you can talk about that in more detail. Maybe if you can put into context, you know, the inventories being down 30% this past quarter year-over-year versus where you'd wanna be now just to kind of frame the sales impact. Thank you.

Speaker #7: Hey. Good morning. Thanks for taking my questions, and I do appreciate all the detail and directness, with the transparency here on the inventory.

Speaker #7: So I see they're down 30% year over year in the in this quarter . I guess if you could maybe talk about where we are now .

Speaker #7: So in February and March , how have those trended ? Have you been able to get that ? It sounds like you've been able to get some inventories back .

Speaker #7: So maybe if you can talk about that in more detail and maybe if you can put into context , you know , the inventories being down 30% this past quarter , year over year versus where you'd want to be now , just to kind of frame the sales impact .

Speaker #7: Thank you .

Doug Campbell: Vincent, brother, good morning. It's good to hear from you. If I think about this, if you're tying sort of our financial transactions and trying to understand inventory flow, we closed our securitization the week I think it was 17 December. That was right in the midst of the holidays. We largely did not really start to build back inventory until the turn of the year. Obviously, you know, a bunch of the auctions, et cetera, are closed for the holidays, and so there wasn't a ton of ground that could be made there, but we were off to the races in the beginning of January. We had been purchasing vehicles right up through the end of January and still right into what I would call the third week into February building for the tax season.

Douglas Campbell: Vincent, brother, good morning. It's good to hear from you. If I think about this, if you're tying sort of our financial transactions and trying to understand inventory flow, we closed our securitization the week I think it was 17 December. That was right in the midst of the holidays. We largely did not really start to build back inventory until the turn of the year. Obviously, you know, a bunch of the auctions, et cetera, are closed for the holidays, and so there wasn't a ton of ground that could be made there, but we were off to the races in the beginning of January. We had been purchasing vehicles right up through the end of January and still right into what I would call the third week into February building for the tax season.

Speaker #2: Vincent , brother . Good morning . It's good to hear from you . So if I think about this , if you're tying sort of our financial transactions and trying to understand inventory flow , we closed our securitization , the week , I think it was the December 17th .

Speaker #2: And so, that was right in the midst of the holidays. We largely did not really start to build back inventory until the turn of the year.

Speaker #2: Obviously , you know , a bunch of the auctions , etc. , are closed for the holidays . And so there wasn't a ton of ground that could be made there .

Speaker #2: But we were off to the races in the beginning of January. We had been purchasing vehicles right up through the end of January, and still right into what I would call the third week into February.

Speaker #2: Building for the tax season . And so I don't think the January 1st exit rate is representative of sort of where we sit and are set up for the tax season , you know , and that's not what February's results would would indicate .

Doug Campbell: I don't think the January first exit rate is representative of sort of where we sit and are set up for the tax season. That's not what February's results would indicate. The question there would be, can we sustain what we're seeing in February, which I would consider largely positive, through the remainder of the quarter? That's a function of the closing the warehouse and the capital structure, and we just need to make sure we're mindful of that. The inventory levels out there, the affordability crisis that's out in the auto market, there is a ton of demand for these inexpensive cars. It's that category, the 6-, 7-, 8-, 9-year-old vehicle that is sort of really on fire.

Douglas Campbell: I don't think the January first exit rate is representative of sort of where we sit and are set up for the tax season. That's not what February's results would indicate. The question there would be, can we sustain what we're seeing in February, which I would consider largely positive, through the remainder of the quarter? That's a function of the closing the warehouse and the capital structure, and we just need to make sure we're mindful of that. The inventory levels out there, the affordability crisis that's out in the auto market, there is a ton of demand for these inexpensive cars. It's that category, the 6-, 7-, 8-, 9-year-old vehicle that is sort of really on fire.

Speaker #2: The question . There would be like , you know , can we sustain what we're seeing in February , which I would consider largely positive through the remainder of the quarter .

Speaker #2: And that'll that'll , that'll that's a function of the closing the warehouse and the capital structure . And we just need to make sure we're mindful of that .

Speaker #2: But the inventory levels out there . The affordability crisis that's out in the auto market . There is a ton of demand for these inexpensive cars .

Speaker #2: It's that category that's six , seven , eight , nine year old vehicle that is sort of really on fire . And so we've seen pronounced pricing in those assets December , January , really just all year .

Doug Campbell: We've seen pronounced pricing in those assets, December, January, really just all year. Of course, that's on the back of you know, the inflationary environment that we saw you know, coming out of Q2. There's incredible demand. I would say we've gotten our fair share for January and into February, and I feel really good about that. The question will be, you know, do we have the structure to continue to support that through the remainder of the quarter?

Douglas Campbell: We've seen pronounced pricing in those assets, December, January, really just all year. Of course, that's on the back of you know, the inflationary environment that we saw you know, coming out of Q2. There's incredible demand. I would say we've gotten our fair share for January and into February, and I feel really good about that. The question will be, you know, do we have the structure to continue to support that through the remainder of the quarter?

Speaker #2: And of course that's on the back of , you know , the inflationary environment that we saw , you know , coming out of Q2 .

Speaker #2: And so there's incredible demand. I would say we've gotten our fair share for January and into February. And I feel really good about that.

Speaker #2: The question will be , you know , do we have the structure to continue to support that through the remainder of the quarter ?

Vincent Caintic: Got it. That's helpful. Thank you. You know, talking about the tax refund season, if you can maybe describe what's been going on so far. Have you been seeing an increase in maybe some cash inflow as a result of hopefully people paying down their loans? Thanks.

Speaker #7: Got it . That's that's helpful . Thank you . And then , you know , talking about the tax refund season , if you can , maybe describe what's been going on so far , have you been seeing an increase in maybe some cash inflow as a result of hopefully people paying down , up , down their loans ?

Doug Campbell: Yeah. It's a great question. For those who understand our business, the tax season payments we set up are usually scheduled at tail end of January and then throughout February and March, just based on when people get their refunds. It's a really great question in terms of like, are we getting those refunds or are those people coming to show up? Obviously, the storm disruption was a huge issue and drove a lot of concern for us here internally. What was interesting, and as we mentioned, overall collections were still up despite the storm for the quarter.

Douglas Campbell: Yeah. It's a great question. For those who understand our business, the tax season payments we set up are usually scheduled at tail end of January and then throughout February and March, just based on when people get their refunds. It's a really great question in terms of like, are we getting those refunds or are those people coming to show up? Obviously, the storm disruption was a huge issue and drove a lot of concern for us here internally. What was interesting, and as we mentioned, overall collections were still up despite the storm for the quarter.

Speaker #7: Thanks .

Speaker #2: Yeah . So that's a great question for those who understand our business , the tax seasonal payments we set up are usually scheduled .

Speaker #2: The tail end of January . And then throughout February and March , just based on when people file their refunds . And so it's a really great question in terms of like , are we getting those refunds or are those people coming to show up ?

Speaker #2: Obviously , the storm disruption was a huge issue and drove a lot of concern for us here internally . What was interesting , and as we mentioned , overall collections were still up despite the storm for the quarter .

Doug Campbell: If you just sort of think about this sort of 8 or 9% of the quarter that was disrupted from the storm, it was such a godsend to have our Pay Your Way platform stood up. What we did tactically is remove the fee structures around all the ways that a consumer could pay. We were really, really pleased at how much cash inflow we saw when people didn't need to come into the store. We've seen the largest amount of remote payments that we've ever had on these tax seasonal payments. As you mentioned, you know, these tax seasonal payments per customer, they're up. We feel like we're getting our fair share, and throughout the month of February is really positive as well. I feel good about that.

Douglas Campbell: If you just sort of think about this sort of 8 or 9% of the quarter that was disrupted from the storm, it was such a godsend to have our Pay Your Way platform stood up. What we did tactically is remove the fee structures around all the ways that a consumer could pay. We were really, really pleased at how much cash inflow we saw when people didn't need to come into the store. We've seen the largest amount of remote payments that we've ever had on these tax seasonal payments. As you mentioned, you know, these tax seasonal payments per customer, they're up. We feel like we're getting our fair share, and throughout the month of February is really positive as well. I feel good about that.

Speaker #2: So if you just sort of think about this sort of 8 or 9% of the quarter that was disrupted from the storm , it was such a godsend to have our pay your Way platform stood up .

Speaker #2: And what we did tactically is remove the fee structures around all the ways that a consumer could pay . And we were really , really pleased at how much cash inflow we saw when people didn't need to come into the store .

Speaker #2: And so we've seen the largest amount of remote payments that we've ever had on these tax payments . And as you mentioned , you know , these tax payments per customer , they're up .

Speaker #2: We feel like we're getting our fair share . And throughout the month of February is really positive as well . And so I feel good about that .

Doug Campbell: On the deal structure side, we're getting some more money down relative to prior year for what we're seeing here in February, and so that's positive. We had started to see that in January as well as people who are using their last paychecks up for December, getting early advanced refunds and tax refund loans. We're starting to see that as well. We have improved deal structures in both January and December that we started to see there as well.

Douglas Campbell: On the deal structure side, we're getting some more money down relative to prior year for what we're seeing here in February, and so that's positive. We had started to see that in January as well as people who are using their last paychecks up for December, getting early advanced refunds and tax refund loans. We're starting to see that as well. We have improved deal structures in both January and December that we started to see there as well.

Speaker #2: On the deal structure side , we're getting some more money down relative to prior year for what we're seeing here in February . And so that's positive .

Speaker #2: We had started to see that in January as well as people who are using their last paychecks up for December , getting early advance refunds and tax refund loans .

Speaker #2: We're starting to see that as well . So we have improved deal structures in both January and December that we started to see there as well

Vincent Caintic: Okay, great. Thank you. Last one for me, just on the capital structure discussion again, and I understand you can't talk much about the warehouse line. But if so, is that process, I guess, the floor plan for your inventory? If you could, you know, talk about that, what that's supporting specifically or is it beyond just floor plan for inventory? Are there other things you can do? I mean, you had a successful December ABS issuance to your point about the non-turbo. Just wondering if there's other sort of transactions that might work out in the meantime. Thank you.

Speaker #7: Okay , great . Thank you . And then last one for me just on the capital structure discussion again . And I understand you can't talk much about the warehouse line , but so is that process .

Speaker #7: The , I guess the floor plan for your inventory ? Is that what's if you could , you know , talk about that .

Speaker #7: What is that supporting specifically, or is it beyond just a floor plan for inventory? And then, are there other things you can do?

Speaker #7: I mean , you had a successful December ABS issuance , to your point about the non-turbo . Just wondering if there's other sort of transactions that might work out in the meantime .

Speaker #7: Thank you

Doug Campbell: Yeah. So I'll answer the second question first and then go back. On the ABS transaction structure, yes, we had a successful issuance. We're always both working, you know, with our partners who run the deals and the rating agencies as well. There is a lot we can do. Obviously, we talked about the new sort of finance team between Jonathan, Marie, and others on the leadership team there, and they're really doing fantastic work, not only on the execution of the structures, but the iterative nature of the improvements to remove our single A ratings cap and working alongside the rating agencies. There is always ongoing work there.

Douglas Campbell: Yeah. So I'll answer the second question first and then go back. On the ABS transaction structure, yes, we had a successful issuance. We're always both working, you know, with our partners who run the deals and the rating agencies as well. There is a lot we can do. Obviously, we talked about the new sort of finance team between Jonathan, Marie, and others on the leadership team there, and they're really doing fantastic work, not only on the execution of the structures, but the iterative nature of the improvements to remove our single A ratings cap and working alongside the rating agencies. There is always ongoing work there.

Speaker #2: Yeah . So I'll answer the second question first and then go back on the ABS transaction structure . Yes , we had a successful issuance .

Speaker #2: We're always both working , you know , with our partners who run the deals and the rating agencies as well . There's a lot we can do .

Speaker #2: Obviously , we talked about the new sort of finance team between Jonathan and Marie and others on the leadership team . There , and they're really doing fantastic work .

Speaker #2: Not only on the execution of the structures , but the iterative nature of the improvements to remove our single A ratings cap and working alongside the rating agencies .

Speaker #2: And so there is always ongoing work there . And obviously it's more important now than ever to make sure that we have touch points with these investors so that when we need to go execute a deal , we can .

Doug Campbell: Obviously, it's more important now than ever to make sure that we have touch points with these investors so that when we need to go execute a deal, we can. We sort of always leave, you know, that proverbial pump primed. In terms of the financing, you know, we talked about this broader language in terms of it's an ABS deal or a warehouse facility or an inventory line. That broad language is just prudent disclosure practice. You know, we need a warehouse. That is gonna be the main thing that seasons the receivables. A warehouse line is something that, you know, we've looked at as well, but what's gonna need—what we're gonna need to host and season the receivables is a warehouse, a line, and a revolving facility.

Douglas Campbell: Obviously, it's more important now than ever to make sure that we have touch points with these investors so that when we need to go execute a deal, we can. We sort of always leave, you know, that proverbial pump primed. In terms of the financing, you know, we talked about this broader language in terms of it's an ABS deal or a warehouse facility or an inventory line. That broad language is just prudent disclosure practice. You know, we need a warehouse. That is gonna be the main thing that seasons the receivables. A warehouse line is something that, you know, we've looked at as well, but what's gonna need—what we're gonna need to host and season the receivables is a warehouse, a line, and a revolving facility. That is sort of the thing that we're focused on.

Speaker #2: And so we sort of always leave , you know , that that proverbial pump primed in terms of the financing , you know , we talked about this broader language in terms of is an ABS deal or a warehouse facility or an inventory line .

Speaker #2: That broad language is just prudent to disclosure , practice . You know , we need a warehouse that is going to be the main thing that seasons the receivables .

Speaker #2: A warehouse line is something that , you know , we've looked at as well , but what's going to need what we're going to need to , to host and season the receivables is a warehouse line .

Speaker #2: And a revolving facility. So that is sort of the thing that we're focused on.

Doug Campbell: That is sort of the thing that we're focused on.

Vincent Caintic: Okay, great. Very helpful. Thank you.

Speaker #7: Okay, great. Very helpful. Thank you.

Doug Campbell: Yeah.

Douglas Campbell: Yeah.

Speaker #8: Got it .

Operator 1: Thank you. This concludes our question and answer session in today's conference call. Thank you for participating, and you may now disconnect.

Operator: Thank you. This concludes our question and answer session in today's conference call. Thank you for participating, and you may now disconnect.

Q3 2026 America's Car-Mart Inc Earnings Call

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